Assessments required to cover rising insurance premiums

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Dear Poliakoffs,

I recently received a notice from my condominium association that there is a $500,000 shortfall in our budget related to insurance premiums. From next month, all unit owners will be charged a certain percentage to meet this shortfall. I don’t think that’s fair, since we’ve all paid association dues monthly as expected — how can they come back to us and charge us more than they originally charged us? Am I wrong about this? This sounds like a scam to me.

Signature, RB

Dear RB,

Due to several market factors, including the Surfside tragedy (the collapse of Champlain Towers South), many insurers have left the Florida market, and the cost of insurance has increased dramatically. Many of our clients have reported premium increases of hundreds of thousands of dollars. So, if your insurance renews in the summer, what you describe is not surprising at all (I’ve heard many reports of similar increases). The association has a legal obligation to carry insurance, and they have to pay for that premium increase one way or another – the only solution is to raise their assessment. This can be accomplished in one of two ways. Either the board can revise the annual budget and collect the increased assessments for the rest of the year (which seems to be happening in your case), or the board can pass a special assessment to collect enough money to cover the shortfall.

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